The Australian dollar continued to demonstrate weakness as risk appetite was slowly coming off markets. Domestic macroeconomic data was weighing on the currency further as the consumer sentiment deteriorated sharply. And while China’s consumer inflation was accelerating, painting a positive picture of the economic health of Australia’s biggest trading partner, that led to concerns that Beijing may withdraw stimulus if prices continue to rise at a fast pace.
The Westpac-Melbourne Institute Index of Consumer Sentiment dipped 0.6% in June from the previous month after rising at the same rate in May. The report commented on the result:
This is a disappointing result given the cut in official interest rates this month and suggests deepening concerns about the economy have outweighed the initial boost from lower rates. Indeed, the Reserve Bankâs move was widely anticipated and may well have âfrankedâ these concerns which would have solidified further following the disappointing national accounts figures released a day later.
Data released in China, Australia’s key trading partner, was mixed. The Consumer Price Index rose 2.7% in May, year-on-year, accelerating from the previous month’s 2.5% rate of growth. At the same time, the Producer Price Index rose 0.6%, slowing from the 0.9% pace of increase registered in April.
AUD/USD declined from 0.6960 to 0.6949 as of 8:57 GMT today. EUR/AUD gained from 1.6268 to 1.6310. AUD/JPY dropped from 75.53 to 75.22.
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